posted at 8:48 am on September 22, 2009 by Ed Morrissey

Four years ago, George W. Bush attempted to reform the entitlement program Social Security, warning that the system was accelerating into collapse and would soon run deficits. Democrats scoffed and claimed the Social Security system was solid and wouldn’t have problems for at least 50 years, as Harry Reid told PBS’ Jim Lehrer in June 2005. Just last year, the CBO — under the direction of Peter Orszag, now budget director in the Obama administration — claimed that the first cash deficits in Social Security would not come until 2019.

Now, however, the CBO has determined that Social Security will run cash deficits next year and in 2011, and by 2016 will be more or less in permanent deficit mode. Hot Air has exclusively obtained the summer 2009 CBO report sent to legislators on Capitol Hill but not yet made public, which shows that outgo will exceed income for the first time since the 1983 fix on an annual basis in 2010:

OASDI Summer 2009 projections: click to enlarge in new window

The numbers need explaining. The number to watch is the “Primary Surplus” number, which watches actual income and expenditures without the interest payments from the general fund. The interest payments mask the fact that costs have begun to outstrip income on an annual basis (individual months have gone into deficit in the past). One way to look at this, according to my sources, is to think of this as a mortgage, and in 2010-11, the income can’t make the payments, so the general fund has to cover them. Since the interest obligation compounds, the debt grows.

As we can see, this trend reverses itself temporarily from 2012-15, but the surpluses are minimal. By 2016, the deficits return, and begin to accelerate again. By 2019, the primary surplus runs $63 billion in the red, almost triple the deficit in 2017, showing the rapid decline of the Social Security system.

This demonstrates nothing better than the poor and politically calculated analyses that came out of the CBO during Peter Orszag’s tenure at the Congressional agency. Democrats wanted analyses that allowed them to ignore the problems in Social Security, and Orszag was happy to supply them. Douglas Elmendorf has had to right the ship at CBO while Orszag continues to blow his predictions at OMB, most notably in overall deficit projections, which Orszag had to admit were off by more than 40% and $2.2 trillion over the next ten years.

Of course, they were helped along by a complacent media unwilling to do math, and a host of apologists for the Left. Chuck Blahous at the Hudson Institute has a good rundown of those he calls the “mythmakers”. It’s worth reading in its entirety, as is Robert Reich’s “All is well!” blogpost from four months ago, apparently working off of the Orszag numbers from last year.

The situation at Social Security is much worse than this administration and Democrats in Congress want to admit. They want to continue busting the deficit and creating new entitlements while the existing ones careen towards collapse. The new data shows that time has almost run out for reform. Seniors will still get their checks, but those will increasingly rely on injections from the general fund and not revenues from Social Security payments. At this point, one has to wonder when SSA becomes a flat-out Ponzi scheme, and who the suckers will be when it blows up.

Update: Fixed a couple of typos, and also recalled (thanks to a Hot Air reader) that SocSec briefly ran an annual cash deficit before the 1983 fix.

Update II: Steve at No Runny Eggs, who has been keeping a very close eye on SSA, says that the CBO numbers project some eye-popping payroll-revenue growth numbers to get back to surpluses (briefly) by 2012. According to the numbers, CBO projects a 6.19% growth rate in 2012, and 5.69% in 2013, then dropping to 4.59% in 2014 and declining afterwards. Assuming that they only peak at the 4.59% number for all three years — still a rather optimistic projection — Social Security never actually comes out of its deficits at all:

Be sure to read Steve’s post to get the full explanation of his projections.

The only problem with that is that it is the Boomer’s hard-earned money that has been sucked off them for the past 40 years to pay for this POS. I’m sure the boomers would have rather invested that money themselves, quite frankly.

The amazing thing, you don’t need to be a math genius to understand that the baby boomers have moved this economy since the late 1940’s. The economy has been built around them, products manufactured for them, we shape the economy…so it only makes sense when we begin to retire, that same happens as has happened for the past 60 years. The problem is, the product we demand is the money we paid in. And the only way to get that product is by taxing other people, because the gov. has mismanaged the Social Security.
Yes, Bush was right…but people like the AARP denied it, dems denied it…

Here comes the elimination of the maximum amount of earnings taxed for Social Security (which will come with the standard “It will ONLY affect the rich” mantra) or/and the increase in the tax rate.

Beaglemom on September 22, 2009 at 8:58 AM

What they don’t tell you, is that this fix only puts off the problem, and makes it worse.

The more you pay into the system, the more you are due when you retire.

Of course what is going to happen is that the liberals will start screaming about billionaires getting $10K per month SS checks, while granny is eating dog food. So they will cap SS payments, while keeping what is paid into the system unlimited.

In other words, they will complete the conversion of SS into just another welfare scheme.

“who the suckers will be when it blows up” – without a doubt it’s Gen X. After the Baby Boomers run up a ridiculous debt on the trust fund, the program will collapse. I have no sympathy for all the BBs having to go back to work because their 401s blew up.

when i was 10 yrs old (40 yrs ago) my father said that he would never see a dime from SS. and though he did see the $, he spent his whole life making sure he could take care of his family should the money not be there.

This 25 year old is all for dismantling this entitlement. Time for you boomers to fend for yourselves again.

Trent1289 on September 22, 2009 at 8:57 AM

So says the young man who has benefited from what we have built…all we want is what we paid in…nothing more, nothing less.
And we don’t want to leave you in a mess. You (generic you) are our sons and daughters. We worked hard to build a society that educated you, and fed you, clothed you, and allowed you to prosper.
We “fended” for you, all the while paying into a system that was forced upon us, and a promise for us to receive at least what we put in.
The time for us to “fend” for us, when we have not only been taking care of us, but changing your diapers…

Seniors will still get their checks, but those will increasingly rely on injections from the general fund and not revenues from Social Security payments.

What general fund?

This 25 year old is all for dismantling this entitlement. Time for you boomers to fend for yourselves again.

Trent1289 on September 22, 2009 at 8:57 AM

This 39 year old feels the same way. I’ve been paying into SS for well over 20 years – including 7 years while I was matching payments on employees – and I’d be more than willing to write all that off if they just quit fleecing me and start acting like grown-ups.

This 39 year old feels the same way. I’ve been paying into SS for well over 20 years – including 7 years while I was matching payments on employees – and I’d be more than willing to write all that off if they just quit fleecing me and start acting like grown-ups.

So says the young man who has benefited from what we have built…all we want is what we paid in…nothing more, nothing less.
And we don’t want to leave you in a mess. You (generic you) are our sons and daughters. We worked hard to build a society that educated you, and fed you, clothed you, and allowed you to prosper.
We “fended” for you, all the while paying into a system that was forced upon us, and a promise for us to receive at least what we put in.
The time for us to “fend” for us, when we have not only been taking care of us, but changing your diapers…

right2bright on September 22, 2009 at 9:05 AM

Do you want me to pay for your healthcare too?

Look, I’m totally on board with you getting what you paid in. That’s only just. But the rest of your post sounds like an expert from The One’s speeches or Hilary’s book.
Yes, yes, it takes a village and all that.
My actual parents fended for me. Them I’ll help. The rest of you are on your own.

This 25 year old is all for dismantling this entitlement. Time for you boomers to fend for yourselves again.

Trent1289 on September 22, 2009 at 8:57 AM

This 39 year old feels the same way. I’ve been paying into SS for well over 20 years – including 7 years while I was matching payments on employees – and I’d be more than willing to write all that off if they just quit fleecing me and start acting like grown-ups.

forest on September 22, 2009 at 9:07 AM

Sure, all you have to do is give boomers, who’ve been paying into Social Security for 30-45 years all their contributions plus the interest they’d have made on it if they’d had the money invested for those years. Sounds fair to me.

Which is why I’m already brainstorming on how to fall off the income grid as much as possible.

Bishop on September 22, 2009 at 8:53 AM

Ding! I’d honestly just say good-bye to the roughly 10 years of money I’ve paid into MediCare and Social Security and agree to never take a dime from either program, if the government would agree not to take any more money from me to fund either one of the two.

The interest payment is as unreal as the trust funds. Just as the feds replace all surplus taxes with IOUs and call these trust funds, it calculates what the interest would be if these trust funds were real and issues additional IOUs to cover this bookkeeping fiction.

Let them play with their numbers all they want but the reality is that all federal trust funds are part of the national debt. Of our $11.8 trillion national debt, $7.5 trillion is owed to individuals and foreign countries and the rest is money the federal government owes to itself.

The boomers voted in the people who made this possible, the slick personalities who kept promising more and who the boomers believed. The BB’s need to take some responsibility for creating the monster.

This is the problem with entitlements. Most people on this site love to say they’re in favor of “small government.” But as soon as some program starts to fail, or someone mentions dismantling it the choruses of “not until i get mine!” start.

The boomers voted in the people who made this possible, the slick personalities who kept promising more and who the boomers believed. The BB’s need to take some responsibility for creating the monster.

Bishop on September 22, 2009 at 9:15 AM

Wow, just wow. You must really hate boomers. The Social Security Act of 1935 predates the birth of the first boomer by more than a decade.

Same here. I’d happily forgo the money I’ve lost if the government would let me keep my money and go my own way; I’d sign a contract if necessary.

I have the advantage of having a business which can utilize straight cash transactions if necessary, and I have a feeling more and more people will start working under the same sort of off-the-record basis whenever possible.

Sure, all you have to do is give boomers, who’ve been paying into Social Security for 30-45 years all their contributions plus the interest they’d have made on it if they’d had the money invested for those years. Sounds fair to me.

ProfessorMiao on September 22, 2009 at 9:11 AM

Sorry, but the money is gone. I don’t have any juvenile expectations of getting my money back and neither should they. It’s just gone. Our elected governments have lived beyond their means, and now it’s just about over.

Uh, that would have been when it started in 1937. My father, (born 1916, died 2005), paid into Social(ist) (In)Security from day one in 1937. He retired in 1981. Several years later he computed how much he had paid into the system and concluded that he’d drawn out everything he paid in within 18 months after retirement. SSA has never been anything but a “cookie jar” for politicians of all stripes.

PS The retirement age for SSA was set at 65 from the start. At the time it began, the average life expectancy in this country was 62, proving that stupid people are nor a recent phenomenon.

When will those Americans who keep voting for these fiscally irresponsible dems start waking up? We need to vote these people out of office in 2010.

texasconserv on September 22, 2009 at 8:57 AM

When we get everyone out of the public school system.

***

So, isn’t this part of the goal of socialized medicine? Medicaid/medicare/social security all varying degrees of insolvency, get everyone in, nobody out and ration like crazy? If we’re all in, we have no recourse to complain over mistreatment, etc.

Wow, just wow. You must really hate boomers. The Social Security Act of 1935 predates the birth of the first boomer by more than a decade.
ProfessorMiao on September 22, 2009 at 9:19 AM

You managed to read quite a bit from a simple post. Hate? Come on, try not to get off track here since it would stand to reason that just about everyone at HA probably has at least one boomer somewhere in their extended family.

I don’t care when it started, but the same people who are demanding their due are the same ones who had the chance to elect people who could have done something about the increasing entitlement programs. The boomers parents came of an age that didn’t rely on SS, surely they passed on a few ideas about personal responsibility and self-sufficiency to their boomer kids?

I will ask the same question I always ask the leftists who troll here:

If your political philosophy is so wonderful, why does your side always have to lie to advance its agenda?

This is another perfect example, back when Bush tried to reform SS, your side got the CBO director to fudge the numbers to stop the reform and all of your side’s elected “leaders” lied and said SS had no serious problems. They all knew it to be untrue, and certainly the CBO guy had to know it was a lie.

So, instead of arguing with the proposed reforms, they lied about the status of SS. Why was that necessary if your political philosophy and ideas are so great?

How do you justify the fact that your politicians must always lie to get elected and push its agenda? (No taxes above $250k; illegals won’t get covered; etc., etc., etc., ad nauseum).

I dare say that there are more twenty-somethings sponging of mom and dad or even grandma than the other way around.

davidk on September 22, 2009 at 9:19 AM

How many of you have been or are accepting Medicare or SS? Since their inception these entitlements have been the young providing for the old.

Fend for ourselves. Ha! You don’t even know what that means. You’ve had a good life thanks my and my parents’ generation. And I doubt you even know the meaning of hard work.

Yeah, yeah. And I’m sure someone from your parent’s generation told you the same thing. The present is always built on the efforts of the past. You want a cookie for not completely ruining the republic?

Your attitude stinks of arrogance.
davidk on September 22, 2009 at 9:19 AM

How dare I not want to foot the bill for the incontinent and the incompetent. Sorry but I pass.